A sale or transfer of a secured asset cannot take place without giving a clear 30 days notice to the borrower. The borrower has a right to redeem the mortgage before the sale or transfer. The power of sale should not be exercised until a notice requiring payment has been served on the mortgagor.

JUDGMENT :

SUNITA AGARWAL, J.

1. Heard Shri Kushal Kant and Shri Raj Kumar Tiwari, learned Advocates appearing for the petitioner and Shri Manoj Kumar Srivastava, learned Advocate for the respondent/bank.

2. The present petition is directed against the orders dated 11.5.2015 and 25.7.2018 passed in S.A. No. 10 of 2004 (Avshesh Jaiswal vs. Branch Manager, Allahabad Bank and others) and Appeal Sr. No. 121 of 2015 (Avshesh Jaiswal vs. Branch Manager, Allahabad Bank and others) passed by the Debts Recovery Tribunal (In short as "the DRT") and Debts Recovery Appellate Tribunal (In short as the "the DRAT"), Allahabad; respectively.

3. The brief facts relevant to decide the present petition are that the respondent bank had initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (In short as “the SARFAESI Act, 2002”) against the petitioner and a demand notice dated 15.4.2011 under Section 13(2) of the SARFAESI Act, 2002 was issued followed by the possession notice under Section 13(4) of the said Act.

4. The borrower/petitioner did not make payment and hence the bank proceeded for sale of the mortgaged property i.e. Secured Assets. The first auction sale scheduled on 26.3.2013 could not be materialized and then a fresh notice was published in the newspapers on 27.9.2013 fixing the date of auction as 6.11.2013.

5. The Secured Asset was sold on 6.11.2013 and sale certificate was issued on 27.11.2013.

6. The borrower/petitioner filed an application under Section 17 of the SARFAESI Act on 7.1.2014, which was registered as S.A. No. 10 of 2014, before the DRT at Allahabad, challenging the auction proceeding and sale of Secured Assets by the bank, on the ground that the mandatory notice as required under Rule 8(6) readwith Rule 9(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as "the Rules, 2002") was not served upon him and the sale of the Secured Asset hence, is illegal.

7. In the said proceeding, it appears that the borrower had also moved an application under Section 13(8) of the SARFAESI Act, 2002 with the assertion that he was ready and willing to redeem the mortgage by paying the entire dues of the bank. The respondent bank had contested the said application by filing the objection dated 21.1.2014. The proceedings before DRT was culminated with the order dated 11.5.2015, whereby the objections taken by the petitioner/borrower to the validity of the auction sale has been turned down. Resultantly, the securitisation application was dismissed on merits. This order was challenged in appeal which has been dismissed vide order dated 25.7.2018 passed by the DRAT. Hence this petition.

8. The orders impugned are challenged in the present petition with the assertion that the entire auction sale held on 6.11.2013 was illegal for non-compliance of the mandatory procedure prescribed under Rule 8(6) readwith Rule 9(1) of the Rules, 2002.

9. It is contended that Rule 8(6) requires service of 30 days clear notice before sale of immovable 'Secured Assets'. Rule 9(1) provides that no sale of immovable property shall take place before the expiry of 30 days from the date on which the public notice of sale has been published in the newspapers or notice of sale has been served to the borrower. As in the instant case, clear 30 days notice has not been given to the borrower neither the requirement of Rule 8(6) nor of Rule 9(1), have been fulfilled. The sale is, thus, unconstitutional and is liable to be set aside.

10. Reliance placed upon the judgments of the Apex Court in Mathew Varghese vs. M. Amritha Kumar and others, (2014) 5 SCC 610, Vasu P Shetty vs. Hotel Vandana Palace & others, (2014) 5 SCC 660 and J. Rajiv Subramaniyan and another vs. M/s. Pandiyas & others, Civil Appeal No. 3865 of 2014 to submit that the sale of immovable Secured Assets in absence of service of 30 days notice i.e. without complying with the provisions of Rules 8 and 9(1), would be unc